2. Basic insurance legal principles and terminology Flashcards

Question

What does s.6 Insurance Act say classes as what the insured 'knows'

Answer 1

Any information they suspect but deliberately refrain from confirming

Answer 2

What insurer knows / Ought to know What insurer is 'presumed to know' Anything that lessens the risk Matters of law

Answer 3

If known by employee of insurer and would reasonably be passed on If accessible within company

Answer 4

Things common knowledge Things insurer operating in this class of business would reasonably be expected to know

Answer 5

1. Reckless 2. When did the breach occur? (Original or Variation)

Answer 6

Law is concerned with ensuring innocent victims are compensated and thus insurers must pay all property damage or personal injury claims from compulsory legislation.

Answer 7

Reckless - Void & Keep premium Careless - If insurer had not entered - Void contract but return premium - If insurer would have entered on different terms - Those terms are used - If charge higher premium - Less claim payout

Answer 8

If insurer would not have agreed - Treat original contract as continuing and return extra premium Agreed variation but on different terms - Contract treated as those changes.

Answer 9

If insurer would not have agreed - Treat contract as if changes did not occur & lower claim payout in proportion of the premium If agreed on different terms - These terms accepted as new contract.

Answer 10

Insured are under no obligation at common law to provide material information after inception.

Answer 11

If insurer fails to ask follow up questions to any information provided, this right is said to be waived. But... insured is not considered to have failed to disclose material facts.

Answer 12

Insurer must not lead insured into false sense of security.

Answer 13

'Good time' to allow them to make other arrangements

Answer 14

Insurer - Written notice (14 days) Insured - Not common, unless insurer entitled to charge short term period rates for term gone

Answer 15

The contract has been fulfilled (E.g reached limit) and is ended

Answer 16

When insured has breached policy condition

Answer 17

Insured cannot data dump (Present in clear way) Insured knowledge extends to broker Insured ought to know - Reasonable search available Insured knows anything they suspect but do not confirm Insurer ought to know anything employee knew and reasonably be expected to pass on Insurer presumed to know - Insurer operating in that field / Common knowledge

Answer 18

Active, efficient cause that sets in motion a train of events which brings about a result, without the intervention of any force started and working actively from a new and independent source.

Answer 19

Insured Perils - (Named as insured) Expected Perils - (Named as NOT insured) Uninsured - Unnamed in policy

Answer 20

Financial compensation sufficient to place the insured in the same financial position after a loss as they enjoyed immediately before the loss occurred

Answer 21

Policy which provides fixed benefits (usually Accident & Sickness) where indemnity is not possible / accurate (E.g loss of leg) Impossible to place someone in same position as before loss

Answer 22

Whatever is stated in policy: Cash Repair Reinstatement Replacement

Answer 23

Insurers are their own insurers during this period of reinstatement Work may go above sum insured, but they must continue

Answer 24

Sum Insured (But can have no limit)

Answer 25

Total value declared by insured

Answer 26

When the insured has undervalued the risk, they are their own insurer for the uninsured bit (Even partial losses are split between insurer and insured based on proportion of underinsurance)

Answer 27

(Sum insured / Value of all goods at risk) x Loss

Answer 28

'The right of an insurer to call upon others similarly, but not necessarily equally, liable to the same insured to share the cost of indemnity' (Insurers contribute to claim on basis or their Rateable Proportion)

Answer 29

1. Common subject matter 2. Insurable interest is the same (same relation to the risk) 3. Insured against common perils 4. Both policies liable for the loss 5. No non-contribution clause

Answer 30

(Policy sum insured / Total sum insured) x Loss

Answer 31

'Right of insurer following payment of claim, to take over the insured's rights to recover payment from third party responsible for loss'

Answer 32

The amount paid out for the insurance claim